NEW YORK (TheStreet) -- Timken Co (TKR) shares are up 6.4% to $63.51 on Thursday following the release of the company's first quarter earnings report.
The company generated net income of $83.5 million for the quarter, or 90 cents per diluted share, beating analysts estimates by 9 cents.
Year over year quarterly revenue rose 1% to $1.1 billion, in line with analyst estimates.
TheStreet Ratings team rates TIMKEN CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TIMKEN CO (TKR) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TKR's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.00, which illustrates the ability to avoid short-term cash problems.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Despite the weak revenue results, TKR has outperformed against the industry average of 17.2%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- TIMKEN CO's earnings per share declined by 29.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, TIMKEN CO reported lower earnings of $2.72 versus $5.05 in the prior year. This year, the market expects an improvement in earnings ($3.66 versus $2.72).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 30.1% when compared to the same quarter one year ago, falling from $75.30 million to $52.60 million.
- You can view the full analysis from the report here: TKR Ratings Report